A lot of different surveys are indicating there’s been an “upsurge” in economic optimism on the part of the business community of late – particularly where small businesses are concerned.
That’s all well and good, but will it benefit the freight market?
More precisely: will such “optimism” turn into more capital outlays for goods, job hires, and the other fundamentals required for expansion, which in turn would help fuel demand for truck capacity?
I think it’s safe to say that’s still an unknown at this point. But tide of good feelings seems to keep on rising, it seems.
Take this survey of more than 1,200 small and medium business owners conducted by Citizens Bank recently.
That poll found that more than half (51%) expect significant improvement in the national economy, with regional improvements expected but more tempered (46%).
“We’re seeing a general optimism about the economy among our longtime customers and businesses in general, fueled by recent changes on the national stage,” noted Jack Murphy, Citizen’s president of business banking, in a statement.
“Interestingly, this confidence isn’t driven by expectations for specific policy changes,” he stressed. “This optimism is translating into growth in terms of capital expenditures as well as hiring, with three-quarters of businesses telling us that they plan to hire staff in the near future.”
Murphy emphasized that “bodes well for individual businesses and broader economic conditions,” as the more than 28 million small businesses in the U.S., which employ 48% of the private workforce, are the “engines of the economy.”
Here some other findings from Citizen’s survey:
- Technology can and must be leveraged for growth: About 95% of business “decision makers” polled by the bank believe technology will impact the future success of their business. They also overwhelmingly expect their investment in technology to increase in the next year (81%).
- Optimism is not tied to specific expectations:Only about half of businesses see tax policy changes impacting their business (44% at the Federal level and 50% at the local level). Anticipation for regulatory impacts is even lower with two-thirds of businesses indicating regulatory changes will not impact their businesses.
- Among those who do foresee a positive impact from legislation: They feel healthcare policy changes at the Federal level (64%) and changes to environmental regulations (51%) are where they expect “relief” to occur.
- Improvements in financial performance are expected: Nearly all businesses (69%) believe their financial future will improve in the next 12 months and one third believe it will significantly improve.
- Regional differences: New England and Midwest businesses are slightly more optimistic about the future, with both regions over-indexing (101), while the Mid-Atlantic is slightly less optimistic, under-indexing at 99. New England’s over-index is driven by strong national and company feelings while the Midwest is over-indexing because of very strong individual business expectations.
- Optimism is stronger across some industries, with some more bullish on revenue: Some 84% of Industrial and 75% of Pharma/Biotech respondents expect revenue to increase in 2017.
- Optimism should translate into growth: Relative to other industries, Industrial (57%), Tech (56%) and Pharma/Biotech (53%) anticipate higher capital expenditure.
A separate survey conducted by software maker Womply highlighted some of the “correlations” between what’s driving optimism or pessimism for small business owners and how that sentiment might affect actions like hiring, increasing wages or benefits for employees,
Some of the findings from that poll include:
- Confidence is high on Main Street. The study revealed that 70% of small business owners are optimistic about business prospects in 2017, compared to 13% who are pessimistic.
- Trump inspires and divides entrepreneurs. Donald Trump’s election as the 45th U.S. president has had a polarizing effect on small businesses, with optimists identifying Trump as their No. 3 reason for confidence (behind customers and employees) and pessimists saying he’s their No. 1 reason for concern.
- Daily business concerns are paramount. Overall, pragmatic concerns are top of mind, with attracting customers, having enough time for everything, and making enough money rating as top worries nationally.
- Business optimism drives economic impact. Optimistic owners are 3.5 times more likely to hire and give raises to employees this year, whereas pessimists are 6.5 times more likely to reduce staff headcount and employee pay. According to Womply, those findings suggest that the impact of small business confidence is enormous when aggregated nationally.
- Taxes are top of mind, healthcare not so much. We asked owners for opinions on timely political and policy matters that affect business. Taxes are the policy area most small businesses want changed, ranking far ahead of healthcare, business regulations, overtime, immigration, and other issues. Regarding healthcare reform, a majority (29%) say that repeal of the Affordable Care Act (more broadly known as ObamaCare) would have no impact on their business.
Still the important impact from all of this for motor carriers is whether this optimism spurs more demand for freight and thus more demand for trucking capacity. We’re probably getting pretty close to the point where we’ll find out.
